Contracting with governments: pitfalls, arbitration, sovereign immunity and enforcement

Entering into a contract with an entity owned or controlled by the state poses unique challenges not faced when dealing with a private commercial counterparty. Parties should be aware of certain distinctive features of negotiating with a state entity from the start of any commercial relationship. It is particularly important for parties to consider these implications when conducting business in the Middle East given that:

i. state entities play a major role in the procurement of major projects, particularly in GCC countries; and

ii. the reconstruction of infrastructure and the development of natural resources in countries such as Iraq require significant foreign investment in the form of contracts with state-owned entities.

Determining whether or not a commercial party is dealing with a state entity is not always a straightforward process in the Middle East. As such, parties should take extra care and consider the following factors at the outset:

a) the capacity of the entity to enter into an arbitration agreement;

b) the ability of the state in question to raise a defence of sovereign immunity in the future; and

c) the investment treaty protections that a company may be able to utilise.

In this article, we set out the key factors that parties should consider when negotiating with a state entity in order to maximise the protections available should a dispute arise at a later point.

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Inaugural conference of the European Federation for Investment Law and Arbitration: 23 January 2015

The European Federation for Investment Law and Arbitration (EFILA) will be holding its inaugural conference on 23 January 2015 at the Senate House in London. The topic of the conference is “EU law and investment treaty law: convergence, conflict or conversation?“. Herbert Smith Freehills is proud to be a sponsor of this important event which will bring together many of the key thinkers in this area, including politicians, civil servants, advisers, practitioners and academics.

For more information and details on how to reserve a place, please see the conference flyer here.

For regular updates on investment treaty law and other public international law issues, please subscribe to our Public International Law Blog (www.hsfnotes.com/publicinternationallaw).

The future of investment agreements: meeting of the World Investment Forum

The number and diversity of parties with interests in the future of international investment protection has never been greater – a result of tremendous growth in cross-border investment and rapid economic development in many parts of the world. At the same time, many stakeholders, including states and NGOs, have argued that the existing framework of investment treaties is in need of reform. Some have alleged, among other criticisms, that existing treaties limit the policy freedom of states to regulate in the interests of public health and environmental protection. In this context, on 16 October 2014 in Geneva, the United Nations Conference on Trade and Development (UNCTAD) convened a conference on the future of international investment agreements (IIAs), including in particular bilateral and multilateral investment treaties, and investor-state dispute settlement (ISDS).

UNCTAD has been working for several years to identify concrete mechanisms and proposals for reform of the system. We previously covered this initiative here. In July of this year UNCTAD also published an Issues Note that identified four potential paths of action and a recommended way forward for the reform of the existing IIA regime. The October conference built upon UNCTAD’s work, and followed the release of UNCTAD’s comprehensive 2014 World Investment Report.

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Upcoming Webinar: Investment Treaties and the African Continent – Change, Risk and Opportunity

Tuesday 8 April 2014, 12.30 – 1.30pm BST

Drawing together the two strands of our recent webinars on Investment Treaty Arbitration and arbitration in the EMEA regions, this webinar will focus on Investment Treaties and the African continent.

Africa is brimming with an abundance of natural resources, talent and ambition. Investment into African jurisdictions is becoming increasingly desirable and competitive, with investors hailing from all over the developed and developing worlds.

In this webinar, our speakers will draw from their knowledge and experience to discuss the differing approaches adopted by African jurisdictions towards Investment Treaties and the continent’s history in terms of Investor-State disputes. The speakers will look at sources of foreign direct investment into Africa (such as China) and the impact this has had on the Investment Treaty landscape. Our speakers will then turn to consider the likely approaches to be adopted by African jurisdictions in future, and the risks and opportunities these present to our clients in the context of an increasingly transparent investor-state dispute settlement system.

Speakers:

Chaired by:

  • Hannah Ambrose, Arbitration Practice Manager, London

If you would like to register for this event please contact Prudence Heidemans.

A webinar is an online seminar delivered to your desktop. On the day of the webinar you will be sent a link to login to the live event.

The webinar is recorded so you can listen again. If you are unable to listen to the live event register anyway and you will be able to listen to the recorded version when convenient.

The webinar is interactive and we welcome questions from our audience. Email your comments to the speakers on the day using the appropriate tab on the player.